"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Friday, January 25, 2013

Gold Stumbles; The Colonel's Gold, Silver & Copper Prices for Next Week

Winter sports, Eureka, Nevada
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: Oil, Copper & Gold – All in the Family (01/22/2013)

Friday's morning prices...

COMEX Gold price = $1,656.0/oz (February contract most active)

COMEX Silver = $31.465/oz (March)
COMEX Copper = $3.6650/lb (March)
NYMEX WTI crude = $96.41/bbl (March)
ICE Brent crude = $113.69/bbl (March)
Eureka Miner’s Gold Value Index© (GVI) = 92.93 (gold value is elevated but falling with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,489.0/oz
COMEX - VAGP = $167.0/oz; gold is trading at a decreasing premium to key commodities.

Morning Miners!

Gold prices stumbled this week as the yellow metal steadily loses its safe-haven allure with respect to currencies as I explain in the Kitco Gold Survey input (see below). There are also is a loss of premium with respect to two key global commodities which you can read about in my latest Kitco commentary, Oil, Copper & Gold – All in the Family.

Not a dazzling week for the metals and miners but most global equity markets continue to be on a tear with Japan's Nikkei showing 11-weeks of gains and longest winning streak since 1977. The S&P 500 is also at pre-recession levels not seen since late 2007 (presently 1,497.47 breaching the 1,500-level twice this week).

Molybdenum spot prices are slightly lower than last week but still close to the $12 per pound level which is OK but the futures market is throwing up some warning flares.  Here are the latest numbers compliments of Thompson Creek Metals (TC):

Metals Week Weekly Average:

As of January 18, 2013
(updated weekly)

Ryan's Notes Average:

As of January 22, 2013
(updated twice weekly)
The London Metal Exchange (LME) futures contracts fell below $12 per pound and are now near or below spot prices which is rarely a good sign:

3-month seller's contract $25,500 per metric ton ($11.57 per pound)

15-month seller's contract $26,210 per metric ton ($11.89 per pound) 

General Moly (GMO) stock is trading at $4.81 per share, nearly 6% lower than last Friday's close. Moly benchmark miner Thompson Creek (TC) is roughly flat for the week.

Where do gold, silver and copper prices go next week? Checkout my today's input to the weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great holiday weekend.

The Colonel's Gold, Silver & Copper Prices for Next Week

Here is my input to the weekly Kitco Gold Survey:

01/25/2012 (10:57AM CT)

Q. Where do you see gold’s price headed next week, up, down or unchanged?

A. Up, $1,660 per ounce target.

Q. Why?

A. Gold has had a difficult week falling this morning by more than $30 below last Friday’s close. Technically there are bearish trends emerging that challenge a return to January’s highs. It does appear, however, that gold is presently oversold and should see some recovery next week. My target of $1,660 per ounce is the range mean of January highs and lows ($1,695.0 and $1,626.0 per ounce) which offers some relief from an intraday low this morning of $1,655.0

As the S&P 500 enjoys its eighth day in the green, rallying to levels not seen since late-2007, gold is having trouble holding ground within its January trading range. As investors find new confidence in the strengthening euro (1.3453) interest in gold as a monetary safe-haven is rapidly fading. This is in marked contrast to 2012 when the fortunes of the yellow metal and European currency often moved together.

Technically, negative 3-month rolling correlations between gold and global commodities oil and copper continue to be troubling exacerbated by weakening 1-month correlations (Ref 6).

For $1,660 per ounce gold we can expect to see silver in a range of $29.5-$31.9 per ounce; and copper in a range of $3.52-$3.71 per pound. Silver and copper are expected to have a positive bias above their range means ($30.731 & $3.6111 respectively) while gold is in neutral position.
The yellow metal has bearishly lost more value relative to oil and copper as well as the broader markets this week.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 92.93, staying below the key-100 level and 1-month moving average of 95.34 (bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) is now a full 13.0% below its 2012 high (1.2710, Nov.15) at 1.1059. The latest price action indicates gold has lost considerable value relative to the broader market and is at a new low this morning.

Background Notes:
  1. My gold target price of $1,660 per ounce is near the geometric mean of the January highs and lows
  2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper.
  3. My Gold Value Index© (GVI) equals 92.93 or 10.4% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 95.34; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
  4. The gold-to-copper ratio today is 451.84 pounds per ounce and below its 3-month moving average of 472.45 and 6-1/2 year trend of 485.92. Falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a very low 1.31%. The 1-month rolling correlation is +0.33; 3-month is -0.44. 3-month relative volatility is 1.56X gold and price sensitivity (beta) is -0.69
  5. The gold-to-silver ratio (GSR) is above its historical norm at 52.630; the 3-month rolling correlation is +0.87, relative volatility is 2.36X gold and price sensitivity (beta) is +2.06. The GSR is below its 3-month average of 53.17; the 1-month gold-to-silver ratio stability is a low 1.93%.
Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)
Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)
Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)
Ref 5: The 2013 Copper & Gold Conundrum (Kitco News, 01/07/2012)
     Ref 6: Oil, Copper & Gold – All in the Family (Kitco News, 01/22/2012)


Colonel Possum

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